How the ECB Can Safely Store Its Crisis Toolkit
Central banker Christine Lagarde needs to point to a steady unwinding of restrictive interest rates.
Christian Sewing, chief executive officer of Deutsche Bank AG, left, and Christine Lagarde, president of the European Central Bank (ECB), at the Frankfurt European Banking Congress on Nov. 22, 2024.
Photographer: Bloomberg/BloombergNext week’s European Central Bank meeting is more important than it might first appear. President Christine Lagarde needs to set the template for 2025, and the clarity of her message is paramount: Forward guidance that the restrictive monetary policy period is over and avoiding recession is the priority.
The Governing Council is widely expected on Dec. 12 to deliver a 25 basis point cut, resisting a more aggressive 50 basis point move. It's just not the ECB's style to surprise — it’s a committee representing 20 nations after all — and the euro money markets aren’t expecting it. There’s also the fragile state of the euro which is hovering precariously above parity to the dollar.